The Outlook for Residual Fuel Production in 2020

Transcription

1 The Outlk fr Residual Fuel Prductin in 2020 Presented by Jhn M. Mayes Platt s Bunker & Residual Fuel Oil Cnference June 25, 2015

2 Turner, Masn & Cmpany Internatinal cnsulting practice since 1971 Dwnstream fcus; refinery/chemical engineers Industry and financial clients Publish varius utlk and frecast prducts Crude and Refined Prducts Outlk Refinery Cnstructin Outlk Wrld Crude Oil Outlk Special Studies 2

3 2020 Bunker Fuel Requirements Upcming shift t lw sulfur bunker fuel in 2020 t present prblems and challenges fr ship wners and refiners. New regulatins initiated by the Internatinal Maritime Organizatin (IMO) IMO has been given jurisdictin by the UN ver shipping safety and envirnmental issues in internatinal waters In January f 2020, bunker sulfur levels will decline frm 3.5% t nly 0.5% In effect in all internatinal waters with the nly exceptin fr Emissin Cntrl areas (ECAs) 3

4 Interests f tw grups are intercnnected. The best transitin is ne where needs f bth have been met. Vessel wners are cncerned abut the supply f bunker fuel Will sufficient vlumes be available What will be the price f lw sulfur bunker fuel Refiners are cncerned abut their prduct mix Cncerns Fr the Future Will distillate be dwngraded int bunker fuel Where will high sulfur fuel be sld 4

5 Perspective frm Vessel Owners Vessel wners have ptins. Install stack scrubbers Cnvert t Liquefied Natural Gas (LNG) N nthing and burn fuel that is available Likely t result frm blending large quantities f distillate Supply f fuel likely t be sufficient Cst relative t crude il t increase 5

6 Perspective frm Vessel Owners Vessel wners have luxury f nt having t be practive Prices f bunker fuel t rise Increased pricing t be felt smewhat evenly acrss the industry (except fr LNG vessels and thse using scrubbers) Nt t have a significant impact n cmpetitive transprtatin sectrs Ptential shift tward trucking/rail in Nrth America and Eurpe These transitins mre driven by ECA requirements f 0.1% S bunkers 6

7 Perspective frm Refiners Refiners have a greater risk. Use f distillates in bunker pl will displace higher sulfur resids creating a surplus f HS resid Price f high sulfur fuel il t decline Sme high sulfur resid may have n dispsitin 7

8 Perspective frm Refiners Refiners have ptins. Blend lw sulfur bunker fuel using distillates Cmpete in a shrinking high sulfur fuel il market Prcess residual fuel away Cking units Resid cracking units Resid desulfurizatin units 8

9 Bunker Fuel in 2020 Distillates can be blended t prduce 0.5% S bunker fuel, but what abut the surplus resid? 0.5% sulfur bunker fuel can be prduced by blending 1.3 millin BPD f distillate 1.2 millin BPD f resid will be displaced 9

10 Glbal Residual Fuel Demand Glbal residual fuel demand has been declining fr decades. 13 Millin BPD

11 Glbal Residual Fuel Prductin 14 As a result, glbal residual fuel prductin has als been declining fr decades. Millin BPD

12 Glbal Residual Fuel Demand Bunker fuel cmprises apprximately 39% f ttal demand fr residual fuel. Feedstcks 8% Industrial 12% Other 25% Utilities 16% Bunkers 39% Bunker demand is single largest use fr residual fuel Electricity generatin is secnd largest use 12

13 Glbal Nn-Bunker Resid Demand Residual fuel demand fr prducts ther than bunker fuel is dwn by 58% since Millin BPD

14 Glbal Bunker Demand The nly bright spt fr refiners has been increasing demand fr bunker fuel. Millin BPD Ttal Bunker Residual Fuel 14

15 70 Resid Share f Bunker Pl The residual fuel cmpnent f bunker fuel is declining as distillates are added. Resid Percent

16 Glbal Fuel Oil Surplus At the current glbal cker cnstructin rate, fuel il will exceed demand in 2020 Glbal crude supply will increase by 5.8 millin BPD by 2020, raising fuel il supply by 800 MBPD At annunced cnstructin rate f ckers, fuel il surplus n 1/1/2020 will be arund 1.0 millin BPD Cnstructin f new cking units needs t rise frm annunced rate f 400 MBPD t arund 600 MBPD t balance supply 16

17 Fuel Oil Balance Changes 2014 t 2020 Fuel il supply is increasing faster than demand between 2014 and Supply/Demand Changes, MBPD 4,000 3,500 3,000 2,500 2,000 1,500 1, Fuel Oil Supply 2020 Shift LNG & Scrubbers 2015 ECA Decline in Other Demand Incremental Crude Fuel Oil Demand Annunced ckers HS Bunker Bunker Grwth 17

18 Glbal Cker Capacity Additins New cking unit additins are belw levels necessary t balance fuel il supply and demand in January New Cking Capacity, MBPD New Capacity Required Additins 18

19 Glbal Cker Capacity Additins Mst new cking additins will be in Canada, Mexic, the Middle East and China. New Cking Capacity, MBPD U.S. Other Cen. & S. Nrth Am. Am. Eurpe Middle East Africa FSU China India Other Asia/Pac. 19

20 Cnclusins Ample vlumes f 0.5% S bunker fuel are likely t be available in 2020 thrugh blending f distillates Current prjectins indicate a surplus f 1.0 millin BPD f high sulfur resid in 2020 The rate f cker refinery additins is increasing but is still belw necessary levels t balance 2020 requirements 0.5%S bunker prices (relative t crude) likely t increase in 2020 High sulfur resid prices (relative t crude) likely t decrease in

21 Cnclusins (cnt.) Bunker price spike in 2H2019 is likely as ckers cme n stream Distillate prices (relative t crude) likely t increase in 2020 Additinal annuncements f cking capacity increases are expected 21

22 Presenter Jhn M. Mayes - jmayes@turnermasn.cm Turner, Masn & Cmpany Telephne: